Kazakhstan is close to getting main pieces of its economy-bolstering rail lines in place

09 сентября 2014, 16:04

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Roads, rail lines and air routes aren’t just ways to get from one place to another.

They’re also economic sparkplugs.

If you can create a critical mass of infrastructure, you can increase your country’s gross domestic product several percentage points.

That’s why Kazakhstan’s economic leaders have accelerated the building of infrastructure the past decade.

Now some of that billion-dollar work is close to paying off.

The main pieces of the rail-line portion of the infrastructure effort will be in place by late 2015.

Two of the new links – an east-west line between the copper-producing city of Zhezkazgan in central Kazakhstan and Beineu in the west – and a north-south line between the central towns of Shubarkol and Arkalyk – opened this summer.

Photo courtesy of Tengrinews.kz

A north-south link from Uzen in western Kazakhstan through Turkmenistan to Gorgan in Iran will be finished in October.

And a rail line that will run entirely outside Kazakhstan, but that will be an important part of its transportation network nonetheless, will open in late 2015. It will run from Azerbaijan’s Caspian port city of Baku, which Kazakhstan can access by cargo vessel, through

Georgia’s capital of Tbilisi to Turkey’s northeastern city of Kars.

Underscoring the importance of these projects to Kazakhstan’s development, President Nursultan Nazarbayev took part in the opening of the Zhezkazgan-Beinu and Shubarkol-Arkalyk lines on August 22.

He will also take part in the inauguration of the Uzen-to-Gorgan line in Turkmenistan in October with Turkmen President Gurbanguly Berdimuhammadov and Iranian President Hassan Rouhani.

It wouldn’t surprise me if the president showed up in Azerbaijan, Georgia or Turkey for the opening of the Baku-Tbilisii-Kars line next year. It will provide a more direct link for Kazakhstan goods headed for Europe.

The 988-kilometer Zhezkagen-Beinu line provides a lot straighter link for products moving between China and western Kazakhstan.

By eliminating 1,000 kilometers from the previous circuitous route, the new link reduces shipping times by two-thirds.

Because Beinu has a rail link with Uzen, goods will also be able to move faster from eastern and central Kazakhstan to Iran’s Persian Gulf ports, where they can be transshipped by sea around the world.

Photo courtesy of vesti.kz

Like the rail lines that helped develop the American West in the 1900s, the Zhezkagen-Beinu link promises to help develop the sparsely inhabited expanse of land between Zhezkagen and Beinu.

“Entire settlements . . . will appear along the route,” the head of the national railway system, Askar Mamin, predicted at the line’s opening ceremony.

Kazakhstan’s leaders also hope the line helps breathe new life into the one-industry towns of Zhezkazgan and neighboring Satpayev.

The cities, which have a combined population of 148,000, have been ailing as the ore in the area’s copper mines has played out.

Similarly, officials hope the 214-kilometer link from the coal town of Shubarkol in central Kazakhstan will help develop Arkalyk, an isolated bauxite- and lead-mining town of 28,000 in the north-central area.

Kazakhstan has been ramping up its exports to Iran in recent years, particularly its grain shipments, and the Uzen-Gorgan line should increase that trade.

It will cut 600 kilometers off the winding route that goods now have to travel by rail from western Kazakhstan to Iran through Turkmenistan. That will save two days of shipping time.

Gorgan is just over the Iranian border from Turkmenistan, but it has good rail links to Iran’s Persian Gulf ports. That’s why the link is so important to Kazakhstan’s goal of sending more products across the globe by sea.

Kazakhstan completed its 137-kilometer portion of the 677-kilometer link and Iran its 70-kilometer segment in 2013. Turkmenistan expects to complete its 470-kilometer section in October.

One of the countries the new link will benefit is India, which has long been frustrated that lack of transportation routes have prevented it from increasing its trade with Kazakhstan.

India has wanted to buy uranium from Kazakhstan, the world’s largest producer, to power its nuclear reactors. It’s also wanted to buy Kazakhstan’s abundant phosphates to produce fertilizer.

But the current way of shipping such products – by rail through Russia to the Black Sea, then by ship through the Mediterranean and the Suez Canal – is expensive and takes 25 days.

In the case of phosphates, the cost of the existing route is so expensive that Indian fertilizer manufacturers would make no money on it.

The Uzen-Gorgan route to the Persian Gulf will slice the cost of transporting goods from central and western Kazakhstan to India and save 10 days of shipping time.

“Iran is an important, but unspoken, factor in India-Central Asia relations,”Arvind Gupta, head of India’s Institute for Defense Studies and Analysis, told the Hindu newspaper.

The rail line that’s scheduled to open next year from Baku to Kars through Tblisi should also play a major role in increasing Kazakhstan’s exports, although the country will have to add cargo vessels and expand its Caspian Sea exporting facilities.

The route will allow Kazakhstan to use Turkey’s existing rail network to ship products from Kars, which is eastern Turkey, to Black Sea and Mediterranean ports.

Perhaps more importantly, the route will provide a direct rail link to Europe through the Marmaryay tunnel under the Bosphorus Strait that Turkey opened in 2013.

That will allow Kazakhstan to break the shipping monopoly that Russia has had on products going from Kazakhstan to the Black Sea.

There have been two problems with the dependence on Russia.

One is that the Russian rail system raises prices at its whim, with Kazakhstan having no leverage to do anything about it.

The other is that the Russian rail system gives domestic cargo priority over Kazakhstan cargo when there’s a shipping-capacity crunch.

This has hurt Kazakhstan during harvest time, with shipments of wheat having to wait until Russian wheat has moved.

Kazakhstan is sure to continue adding rail lines in coming years, with each filling out the network and giving the country more economic muscle.

But when the Uzen to Gorgas and Baku to Kars links are complete, the most important pieces of the rail system will be in place.

The next step will be for Kazakhstan to accelerate its export-marketing efforts to ensure it gets the most bang from its hefty rail investments.